MEPs hail new rules to tackle tax dodging by multinationals

Agreement on the public country-by-country reporting, known as pCBCR, was reached late on Tuesday by the European Parliament and Council.
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By Martin Banks

Martin Banks is a senior reporter at the Parliament Magazine

02 Jun 2021

The new rules mean that multinational corporations with a turnover of more than €750m per year in two consecutive years will be obliged to publicly declare how much they earn in profits, how much they pay in tax and how many employees they have in the EU countries.

This information must be disclosed on a yearly basis for each Member State.

The measures, which MEPs had campaigned for, are seen a key tool to tackle corporate tax avoidance and increase transparency around how multinationals operate.

The agreement is the first of its kind globally that MEPs hope will make currently undisclosed information publicly available.

The Portuguese presidency managed to break the five-year deadlock in the Council, thereby paving the way for an agreement on Tuesday. The agreement still needs to be confirmed by the full plenary of the European Parliament.

Many MEPs have cited Amazon as being one of the companies which will be affected by the new legislation.

The company’s record on paying taxes and also the treatment of its employees has come under the spotlight in Parliament and elsewhere recently and the S&D group is pushing for a specific debate to be held on Amazon during next week’s plenary session.

“This lays the foundation for more tax justice and will finally oblige large multinational companies to publicly disclose where they make their profits and where they pay their taxes … It will also empower public scrutiny of known tax-dodgers such as Apple and Amazon” Evelyn Regner, S&D

Amazon CEO Jeff Bezos was heavily criticised when he declined an invitation to speak to a parliamentary hearing last week about his company’s tax activities.

According to figures from the campaign group, Tax Justice Network, EU Member States are found to be responsible for 36 percent of global tax losses, costing countries worldwide over $154bn in lost tax every year.

Reaction to the agreement was swift, with Socialist member Evelyn Regner, Parliament negotiator on pCBCR, saying, “This lays the foundation for more tax justice and will finally oblige large multinational companies to publicly disclose where they make their profits and where they pay their taxes.”

“This decision will not only boost investors’ appetites - which is of particular importance given that we need investment more than ever to relaunch our struggling economies - but also empower public scrutiny of known tax-dodgers such as Apple and Amazon.”

She added, “Thanks to the new rules, we will know which companies are free-riding and which are contributing their fair share to society.”

S&D leader Iratxe García Pérez noted, “This will make it much harder for companies to blow smoke and conceal their real economic activities in each count.”

EPP member Sirpa Pietikäinen, group negotiator on the Economic and Monetary Affairs Committee, said the deal is “long overdue and an important leap towards a better and more durable way of taxing companies in the future.”

“From now on, the spotlight is brightly and clearly on those companies who systematically avoid taxes” Sirpa Pietikäinen, EPP

She said, “From now on, the spotlight is brightly and clearly on those companies who systematically avoid taxes.”

Heidi Hautala, Greens/EFA shadow rapporteur for the file in the Legal Affairs Committee, commented, “Tax transparency for multinationals is essential on the road to tax justice. Citizens deserve to know how much companies pay in tax and how much they earn where they operate. This is an important first step.”

German Greens MEP Sven Giegold, financial and economic policy spokesperson for his group, said, “This agreement is a defining moment for tax justice in Europe. Country-by-country reporting is an effective tool to expose the dark side of tax competition.”

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